Weekly Oil Industry Barometers – 5 March 2021

This has been a very surprising and great week for the oil industry.

The OPEC+ members – Organization of the Petroleum Exporting Countries and their Russia-led allies – held their meeting this week and decided not to increase oil production in April. As a result, oil prices and share prices of all major oil companies soared this week ending on 5 March 2021.

The price of Brent crude oil surged to $69.36 per barrel while the WTI crude oil closed higher also at $66.28 this week.

STOCK PRICES OF MAJOR OIL COMPANIES

All oil major companies saw huge gains in their stock prices this week.

Here are their closing prices and the weekly changes.

CHEVRON – $109.00 up 9%

EXXONMOBIL – $60.93 up 12.1%

CONOCOPHILLIPS – $58.34 up 12.2%

BP – $26.77 up 9.7%

ROYAL DUTCH SHELL – 18.13 EUR up 7.3%

TOTAL – 40.97 EUR up 6.7%

ENI – 10.06 EUR up 6.1%

RIG COUNTS

The weekly US rig count increased to 403. The oil companies in the US added one rig last week, according to Baker Hughes Rig Counts.

The total global rig count continues its monthly gain. It increased by 87 rigs in the month of February 2021 to 1270. The total global rig count in January was 1183. 

This weekly report is adapted by LDI Training from various sources of information.

March 6, 2021

Oil and Gas Activities in Indonesia in 2020

The upstream oil and gas industry of Indonesia invested 10.21 billion US dollars and performed well in 2020 according to SKK Migas, the special task force in charge of upstream oil and gas activities of oil companies in Indonesia.

The oil and gas industry of Indonesia successfully met and even exceeded some of the 2020 targets that were set by the Indonesian government in the following key areas:

  1. Reserve Replacement ratio (RRR).
  2. Oil lifting
  3. Controlling the cost recovery
  4. Revenue intake by the government
  5. Completion of oil and gas projects

RESERVE REPLACEMENT RATIO

The reserve replacement ratio in 2020 is 101.6%. The oil industry added 705 MMBOE of reserve in 2020.  

OIL AND GAS PRODUCTION

The average daily oil lifting in 2020 is 706,000 BOPD. This exceeded the government target of 705,000 BOPD.

However, daily gas production in 2020 is 5461 MMSCFD. This is below the government target of 5556 MMSCFD.

COST RECOVERY

The amount of cost recovery in 2020 is US$ 8.12 billion which is in line with the government expectations.

OIL REVENUE TO GOVERNMENT

The oil industry contributed US$ 8.4 billion of revenues to the Indonesian government. This amount is 41% higher than the expected amount of US$5.86 billion.

COMPLETION OF EXPLORATION AND PRODUCTION PROJECTS

Fifteen oil and gas projects went on stream in 2020. These new projects added 9182 barrels of oil per day and 111 million SCF of gas per day.

3199 Km of 2D seismic and 1251 Km2 of 3D seismic surveys were completed in 2020.

SKK Migas was active and running in 2020 to keep the oil and gas exploration and production activities at a high level. Here are some of the key actions that SKK Migas undertook in 2020: 

  • SKK Migas signed twenty-four PSC side letters and sixty-one letters of agreement (LoA).
  • The government reduced the prices of gas sold to domestic companies to stimulate economic growth.
  • Allowing oil and gas operators to delay topping up the Abandonment and Site Restoration fund.
  • Eliminating the costs to oil operators of using government assets in their exploration and production activities.
  • Allowing oil companies to accelerate asset appreciation.
  • SKK Migas and Chevron Pacific Indonesia signed the Heads of Agreement to ensure the continuity of a high level of activities such as well drilling and production optimization in the Rokan Block during the final phase of the PSC contract. Chevron will hand over the operatorship of The Rokan block to Pertamina when its production sharing contract expires in August 2021.
  • SKK Migas approved the Plan of Development (POD) submitted by Repsol for the development of the huge Kaliberau gas field having 445 billion SCF of gas reserve in the Sakakemang block. The total investment in this project is estimated at 359 million US dollars.

PERFORMANCE OF THE OIL AND GAS OPERATORS IN 2020

Here are the top nine oil and gas operators who exceeded their oil production targets in 2020.

  • Chevron Pacific Indonesia
  • Pertamina Hulu Mahakam
  • Pertamina Hulu Energi ONWJ  
  • Pertamina Hulu Energi OSES
  • Petrochina International Jabung
  • Medco E & P Natuna
  • Pertamina Hulu Sanga Sanga
  • Medco E&P Rimau
  • JOB Pertamina – Medco Tomori Sulawesi

Here are the top nine oil and gas operators who exceeded their gas production targets in 2020.

  • BP Berau
  • Pertamina Hulu Mahakam
  • Eni Muara Bakau BV
  • JOB Pertamina – Medco Tomori Sulawesi
  • Premier Oil Indonesia
  • Petrochina International Jabung
  • Medco E & P Natuna
  • Kangean Energi Indonesia
  • Pearl Oil (Sebuku)

EXPLORATION AND PRODUCTION TARGETS FOR 2021

Being optimistic that Indonesia will meet the target of 1 million BOPD and 12 BSCFD of gas by 2030, SKK Migas is committed to keeping oil and gas production high in 2021. Here are its ambitious targets for oil and gas activities in 2021:

  • Daily oil production – 705,000 BOPD. This is the same target as in 2020.
  • The number of exploration wells – 43. This is a significant increase from 28, the actual number of exploration wells drilled in 2020.
  • The number of development wells – 616. This target is much higher compared with the 240 development wells drilled in 2020.
  • Number of workovers – 615
  • Number of well services – 26,431
  • 2-D seismic survey – 3569 Km
  • 3-D seismic survey – 1549 Km2

The Indonesian oil industry performed well in 2020. Mr. Dwi Soetjipto, the head of SKK Migas said: “The year 2020 was a difficult year for many oil operators due to the Covid 19 pandemic and the low oil prices. Nevertheless, the oil industry of Indonesia was able to meet several targets set by the government. Hopefully, this will help the country’s economy.”

This blog article is adapted from “Kinerja Hulu Migas Gemilang Sepanjang 2020” published by SKK Migas on 4 January 2021.

This article is adapted from SKK Migas news by Jamin Djuang – Chief Learning Officer of LDI Training.

Ten Largest Geothermal Plants in Indonesia

Geothermal wells at Muara Laboh

Indonesia is the second-largest geothermal energy producer in the world after the USA.

Located right on the long stretch of the ring of fire, Indonesian islands are endowed with rich geothermal resources. The total potential geothermal resources of Indonesia are estimated at 28,000 MW.

Although the geothermal potential is huge, its utilization rate is under 8%. Currently, the total installed power generating capacity from the active 16 geothermal power plants in Indonesia is 2133 MW.

Here are the top ten largest geothermal plants in Indonesia in 2020.

The Kamojang Geothermal Plant

Operating since 1982, the 235 MW Kamojang plant is the first geothermal power plant in Indonesia. Located in the Garut area in West Java, it has been operating for 38 years.

The Dutch spotted the Kamojang geothermal potential more than one hundred years ago and drilled several wells in the area. In 1926 it successfully drilled the first steam producing well in Kamojang, also the first in Indonesia.  

Later in I971, Pertamina Geothermal Energi (PGE) with cooperation from New Zealand began to develop the field followed by the construction of the Kamojang power plant, the first geothermal power plant in Indonesia.

The plant is operated by Pertamina Geothermal Energi.

The Salak Geothermal Power Plant

Producing 370 MW of power, the Salak plant is the largest geothermal power plant in Indonesia and is also one of the largest in the world.

Located at Gunung Salak in West Java, the Salak plant has been operating since 1994.

The Salak geothermal resources were initially explored and developed by Unocal. In 2005, the Salak geothermal assets were taken over by Chevron who eventually sold it to Star Energy in 2017. 

The Darajat Geothermal Plant

The 220 MW Darajat geothermal plant, located at Garut in West Java, started its commercial operation in 1994 and is one of the oldest geothermal power plants in Indonesia.

The Darajat geothermal assets were initially explored and developed by Amoseas. The assets were later taken over by Chevron who eventually sold it to a consortium led by Star Energi in 2017.

The Darajat resource has two special characteristics. First, it is one of only a few dry steam fields in the world.

Secondly, the Darajat wells are highly productive. While the worldwide average capacity of a geothermal well is 5 to 10 MW, a Darajat well can produce 40 MW of power.


The Sarulla Geothermal Plant

The Sarulla geothermal power plant, with 330 MW capacity, is the second-largest geothermal plant in Indonesia and is also one of the largest geothermal plants in the world.

The Sarulla geothermal resources, located in North Sumatera, were initially discovered by Unocal. Unocal conducted extensive exploration in the Sarulla geothermal working area from 1993 to 1998. It drilled a total of 13 deep wells and proved the existence of 330 MW of commercial geothermal reserves for 30 years.

However, due to the Asian financial crisis in 1997, the Unocal proposed power plant was not constructed until after the project was taken over by Sarulla Operation Limited (SOL).

Sarulla Operation Limited completed the power plant in 2016. The company is a consortium consisting of Medco Power Indonesia, INPEX, Ormat International, Itochu Corporation, and Kyushu Electric Power.  

The Muara Laboh Geothermal Plant

Completed in 2019, the 85 MW Muara Laboh geothermal plant is the newest plant among the ten largest geothermal power plants in Indonesia.

The Muara Laboh geothermal plant is located in West Sumatera and is operated by Supreme Energy Muara Laboh (SEML).

It took the company 12 years to complete the geothermal project at 587 million US dollars.

The operator of the project, PT Supreme Energy Muara Laboh (SEML), is a consortium consisting of PT Supreme Energy, ENGIE, and Sumitomo Corporation.

Having proven reserves of 200MW, the company is in negotiation with PLN, the national power company, to build a second power generation unit.

The Ulubelu Geothermal Plant

Operating since 2012 and located at Lampung in Sumatera, the 220 MW Ulubelu geothermal power plant is operated by Pertamina Geothermal Energi.

The combined 220 MW power comes from the four 55 MW power generation units.

The Lahendong Geothermal Plant

The 120 MW Lahendong geothermal plant is located in Tomohon in North Sulawesi. The Lahendong plant started to operate commercially in 2001 and Pertamina Geothermal Energi (PGE) is the operator.

Its combined 120 MW power is generated from the five 20 MW power generation units.

The Wayang Windu Geothermal Plant

Located in the Bandung area in West Java, the 227 MW Wayang Windu geothermal plant began its commercial operation in 1999.

Star Energy operates the Wayang Windu geothermal assets under a joint cooperation contract with Pertamina Geothermal Energi.

The Dieng Geothermal Plant

The 60 MW Dieng geothermal power plant started to operate in 1998. The Dieng plant is located in the Dieng area in Central Java and is operated by Geo Dipa Energi.

Geo Dipa Energi is currently working on the following projects in the Dieng work area:

  1. Adding a small 10 MW power plant.
  2. Developing a 55 MW Dieng-2 power plant (PLTP Dieng Unit 2)
  3. Developing a 55 MW Dieng-3 power plant (PLTP Dieng Unit 3)

The Patuha Geothermal Plant

The 55 MW Patuha geothermal plant located at the Ciwidey area in West Java has been in operation since 2014.

Geo Dipa Energi as the operator is committed to drill 12 new wells beginning in 2021 and construct a second 55 MW power plant. Its long-term plan is to increase the Patuha power generation capacity to 400 MW.

Other Geothermal Plants in Indonesia

Sixteen geothermal power plants are operating in Indonesia currently. Besides the above top ten largest plants, here are two other geothermal plants that are worth mentioning.

The Lumut Balai Geothermal Plant

The 55 MW Lumut Balai geothermal plant, located at Muara Enim in South Sumatera, started to operate commercially in 2019.

Pertamina Geothermal Energi operates the Lumut Balai assets and the company is planning to build a second power generation unit.

The Sorik Marapi Geothermal Plant

The 45 MW Sorik Marapi geothermal power plant, located in Mandailing Natal in North Sumatera, came online in 2019.

PT Sorik Marapi Geothermal Power operates the Sorik Marapi assets and the company is currently constructing its second 45 MW power plant. This second unit is expected to operate in 2021.

Geothermal is Rising in Indonesia

The list of the top largest power plants in Indonesia will likely change in 2021 as several new power plants will be completed in near future. In 2021 we expect the 86 MW Rantau Dadap geothermal plant to begin to operate.

The Indonesian government is very keen to develop its vast geothermal resources to increase the contribution of renewable energy in its energy mix. Its targets are to increase the geothermal power generation capacity to 7500 MW by 2025 and 9300 MW by 2035.

To meet these targets, the government will provide funds to help companies in their exploration drillings, provide tax holidays, and remove certain taxes.

With a total of 265 potential sites for geothermal plants located across the country, the utilization of the geothermal resources should continue to increase long into the future in Indonesia.

Written by Jamin Djuang – Chief Learning Officer of LDI Training and author of The Story of Oil and Gas: How Oil and Gas Are Explored, Drilled, and Produced

The Amazing Rise of Medco Energi

The Belanak FPSO

This year, Medco Energi is celebrating its forty years of continuing successes and presence as one of the leading energy companies in Indonesia and South East Asia.

Medco Energi International became a public company in 1994, and today it operates in eight countries.

It has interests in oil and gas exploration and production, geothermal power generation, gas distribution and trading, and mining.

The Beginning of Medco

Medco Energi has come a long way in a short time since it started as an oil drilling service company in 1980, Meta Epsi Pribumi Drilling Company (MEDCO).

Founded by Mr. Arifin Panigoro, Medco Energi is a trailblazer ever since its beginning.

The Acquisition of Stanvac Indonesia

The first breaks that made Medco became big and successful were the acquisition of Stanvac’s oil and gas assets in South Sumatera in 1995, and the following discovery of the big oil fields in Kaji and Semoga in the Rimau Block, in South Sumatera.

Stanvac Indonesia, set up by Standard Oil of New Jersey in 1912, was one of the oldest and biggest oil companies in Indonesia during the Dutch colonial era.  

The Acquisition of ConocoPhillip’s Interest in West Natuna Sea Block B PSC

The Acquisition of ConocoPhillip’s Interest in West Natuna Sea Block B

Medco Energi further expanded in 2016 when it purchased ConocoPhillips’s 40% interest in the West Natuna Sea Block B and took over the operatorship of the block.

This acquisition added substantial gas and liquids reserves and increased Medco Energi’s daily production by over 35%.

The block is in approximately 300 feet of water and had 11 offshore platforms, four producing subsea fields, and one FPSO – the Belanak FPSO – in addition to two dedicated floating storage and offloading vessels.

The Belanak FPSO was described as one of the most complex FPSO in the world. It was the first offshore liquefied petroleum gas (LPG) facility on a floating vessel in the Asia Pacific region when it was commissioned in 2004.

The fields include the Belanak field, South Belut field, Hiu field, Kerisi field, North Belut field and Bawal field.

The produced natural gas is sold to Singapore and Malaysia through a 654 KM long 28 inch gas pipeline.

Medco Energi also assumed the operatorship of the Onshore Receiving Facility in Singapore following the acquisition.

Acquisition of Ophir Energy

Medco Energi Internasional continued to expand by acquiring Ophir Energy, a London-based independent in 2019.

The acquisition of Ophir Energy increased Medco Energi’s daily oil and gas production by 29% to 110,000 BOE per day.

By taking over the operatorship of Ophir Energy’s offshore Bualuang field in Thailand, Medco Energi became a leading regional oil and gas player in South East Asia.

Epilogue

Besides acquiring producing assets, Medco Energi is also active in exploring for new oil and gas reserves.

Its 2020 exploration drilling campaign in the South Natuna Sea Block B is 100% successful. It tested hydrocarbon in all the four exploration wells it drilled. The wells are Bronang-2, Kaci-2, Terubuk-5, and West Belut-1.

Medco Energi is planning to develop these fields.

As Medco Energi celebrates its 40 years of progress, with its solid management team, it certainly will continue to march toward an even brighter future.

Here is the top management team of Medco Energi.

Muhammad Lutfi – President Commissioner

Hilmi Panigoro – President Director

Roberto Lorato – Chief Executive Officer

Anthony R Mathias – Chief Financial Officer

Ronald Gunawan – Chief Operating Officer

Amri Siahaan – Chief Human Capital and Business Support Officer

Myrta Sri Utami – VP Corporate Planning & IR

Siendy K Wisandana – Head of Legal Counsel and Secretary

Written by Jamin Djuang – Chief Learning Officer of LDI Training and author of the published book The Story of Oil and Gas: How Oil and Gas are Explored, Drilled and Produced.

The Old Dutch Oil Companies in Indonesia

The Balikpapan Refinery – Photo courtesy of Tropenmuseum

Since the early 1900s, with oil discoveries in Sumatera in 1885, Java in 1887, and Kalimantan in 1891, Indonesia has been recognized as an important oil-producing country outside America.

By 1900 there were already 18 oil companies operating in Indonesia. It is interesting to note that only companies registered in Nederland and managed by the Dutch could operate in Indonesia at that time.  The reason for this was up until World War II, Indonesia was under the administration of the Netherlands East Indies (NEI).

These old Dutch oil companies played important roles in putting Indonesia on the world map as a significant producer of crude oil and fuels. They discovered and developed many oilfields in Indonesia, and even built refineries in Sumatera, Java, and Borneo. By 1938, oil production had reached 140,000 barrels per day.

Oil well drilling in Pangkalan Susu, Sumatera, in 1916 by KNPM.

By 1945, the year when Indonesia declared its independence, due to acquisitions and mergers, the number of oil companies had reduced to just four: BPM (Bataafsche Petroleum Maatschappij), NIAM (Nederlands Indische Aardolie Maatschappij), STANVAC, and CALTEX.

Stanvac and Caltex which were owned by their American parent companies started as Dutch-registered companies.

After 1965, when Pertamina acquired BPM, all the oil companies with Dutch names no longer existed. Nevertheless, their names appeared in many old and new articles and are often cited in research papers.

Since the names of the old Dutch oil companies in Indonesia consisted of long Dutch words, they were often written in their acronyms.

Here is the glossary of the acronyms of some of the old Dutch oil companies that operated in Indonesia in the past. 

BPM – Bataafsche Petroleum Maatschappij

DPM – Doordsche Petroleum Maatschappij

KNPM – Koninklijke Nederlandsche Petroleum Maatschappij

NIAM – Nederlands Indische Aardolie Maatschappij

SPPM – Sumatera Palembang Petroleum Maatschappij

MEPM – Muara Enim Petroleum Maatschappij

NNGPM – Nederlandsche Nieuw Guinea Petroleum Maatschappij

SVPM – Standard Vacuum Petroleum Maatstchappij

SVTM – Standard Vacuum Tankvaart Maatschappij

NKPM – Nederlandsche Koloniale Petroleum Maatschappij

NPPM – Nederlandsche Pacific Petroleum Maatschappij 

SMOB – Steenkolen Maatschappij Oost Borneo

NIIHM – Nederlandch Indisch Industrie en Handel Maatschappij

If you are interested in the history of oil in Indonesia, please read The Three Big Oil Companies in Indonesia before 1945.  

This article is written by Jamin Djuang – Chief Learning Officer of LDI Training and author of The Story of Oil and Gas: How Oil and Gas Are Explored, Drilled and Produced.

The Three Big Oil Companies in Indonesia before 1945

Sungei Gerong Refinery in South Sumatera in 1926

The first oil exploration in Indonesia started not long after Colonel Drake successfully drilled the first oil discovery well in Pennsylvania in the United States in 1859.

By 1869, Dutch businessmen in Indonesia, known as the Netherlands East Indies at that time, had noticed and recorded 53 oil seepage locations in Sumatera, Java, and Kalimantan.

Then the first oil well drilling in Indonesia took place in 1871 in West Java.

However, commercial discoveries were made only several years later when a Dutch businessman drilled successful exploration wells in Pangkalan Brandan in North Sumatera in 1885 and Sanga-Sanga in East Kalimantan in 1892.

These two discoveries caught the attention of the world and put Indonesia on the map as one of the countries with interesting oil potentials.

By 1900 there were already 18 oil companies searching for oil in the Netherlands East Indies (NEI). All these companies were either Dutch companies or non-Dutch companies registered in Nederland. The high level of activities resulted in significant oil discoveries in the early 1900s.

Following the oil discoveries, refineries were built in Pangkalan Brandan in North Sumatera in 1892, Sungei Gerong in South Sumatera in 1926, Balikpapan in East Kalimantan in 1922. By 1940, there were already seven refineries in NEI: three in Sumatera, three in Java, and one in Kalimantan.

In 1938, the daily crude oil production was about 140,000 BOPD and in 1953 it was about 190,000 BOPD.

The high level of oil production and refining activities from 1900 to 1940 made Indonesia well-known as one of the world’s significant crude oil producers and refined product suppliers at that time.

Recognized as a significant oil producer, Indonesia was invited to become a member of OPEC 1962.

The three oil companies that produced about 90% of all the petroleum in Indonesia during the Dutch colonial period are:

  • BPM – Bataafsche Petroleum Maatschappij
  • STANVAC – Standard Vacuum Oil Company
  • CALTEX

Here are the amazing stories of these three big oil companies operating in Indonesia before 1945.


BPM

BPM is Bataafsche Petroleum Maatschappij, also called the Batavian Oil Company. Batavia, which is Jakarta today, was the center of the NEI government.

BPM was established in 1907 by KNPM (Koninklijke Nederlandsche Petroleum Maatschappij) also known as Royal Dutch Petroleum Company and Shell Trading and Transport Company to explore and produce oil in the Netherlands East Indies.

Royal Dutch Petroleum Company owned 60% and Shell owned 40% of BPM.

Before BPM was set up, there were already as many as 18 oil companies operating in the Netherlands East Indies (NEI) from North Sumatera, Java, Borneo, and all the way to Papua.

BPM quickly took over almost all of these companies and dominated the oil industry in Indonesia. By 1920, it had controlled more than 95% of crude oil production in Indonesia.

In 1921, as the government of the Netherlands East Indies wanted to take part in the booming oil business in Indonesia, NEI and BPM formed another company called NIAM (Nederlands Indische Aardolie Maatschappij).

Many big changes took place in the oil industry after Indonesia declared its independence in 1945. The first big change was the takeover by the government of Indonesia the NEI’s 50% ownership in NIAM.

This marked the beginning of an Indonesian government-owned oil company. It also started a working relationship between BPM and the government of Indonesia. With this relationship, BPM managed to extend its activities in Indonesia until 1965.

In 1965, BPM sold all its assets in Indonesia to the Indonesian state-owned company PN Permina for US$110 Million. Permina later became Pertamina.

BPM operations in Indonesia were extensive. They stretched from the western part of Indonesia to the eastern part of Indonesia.

Here are the operations of BPM in various parts of Indonesia.

BPM In Borneo

In 1907, right after it was formed, BPM acquired the oil fields and refinery in Balikpapan from Mathilda company. It also acquired the oil fields in Sanga Sanga and Tarakan which had been discovered previously by KNPM (Koninklijke Nederlandsche Petroleum Maatschappij).

BPM expanded its exploration and production aggressively in East Borneo and continued to discover several other fields in these areas.

On the small island of Tarakan, BPM drilled 700 oil wells and built a refinery.

Production continued to increase and in the 1920s the Tarakan wells produced about 18,000 BOPD, a third of the total oil production in the whole Dutch East Indies.

BPM in North Sumatera

BPM acquired from KNPM the oil fields and the refinery located at Pangkalan Brandan. BPM also took over the operations of the oil tanking and the oil export facilities at Pangkalan Susu. Pangkalan Susu was the first oil-exporting port in Indonesia.

BPM in Java

In Java, BPM acquired the oil assets of DPM (Doordsche Petroleum Maatschappij), a Dutch oil company established by Adriaan Stoop in 1887.

DPM had discovered and operated the Kruka Field and the Djabakota Field near Surabaya in East Java. DPM also had built the oil refinery in Wonokromo. Completed in 1893, this was the first oil refinery in Indonesia.

By acquiring DPM, BPM also became the owner of some thirty oil fields in East Java including another refinery located in Cepu which was built in 1894.

BPM In South Sumatera

In South Sumatera, BPM took over SPPM (Sumatera Palembang Petroleum Maatschappij). SPPM had been operating the oil fields in its concessions in Banyuasin and Jambi.

BPM also acquired the oil assets of MEPM (Muara Enim Petroleum Maatschappij). MEPM had discovered the Muara Enim field and built the Plaju Refinery.

BPM In Irian Jaya

In 1935 BPM expanded its search for oil into Irian Jaya. For this venture, along with other partners, BPM formed a joint venture company named NNGPM (Nederlandsche Nieuw Guinea Petroleum Maatschappij) with exploration rights for 25 years.

By 1938 they had discovered the Klamono oil field. followed by Wasian, Mogoi, and Sele fields.

However, for commercial reasons, these fields were not developed.

STANVAC

STANVAC – Standard Vacuum Oil Company – started as NKPM (Nederlandsche Koloniale Petroleum Maatschappij) in 1912. NKPM was set up in Nederland by the American company Standard Oil of New Jersey so it could explore for oil in Indonesia.

Since Indonesia was under the control of the Netherlands East Indies at that time, Jersey Standards had to set up NKPM as a Dutch-registered and Dutch-managed company with headquarters located in The Hague.

NKPM began to make exploration in Java and South Sumatera in 1914.

It was in South Sumatera NKPM found its liquid gold. Operating from the city of Palembang, it discovered the Petak field in 1914, the Trembule field, and the huge Talang Akar field in 1921. These discoveries prompted NKPM to construct the famous Sungai Gerong oil refinery.

In 1922 NKPM changed its name to SVPM (Standard-Vacuum Petroleum Maatschappij).

It also constructed the 130 Km long pipeline from Pendopo area to Sungai Gerong to bring the crude oil from the prolific Talang Akar field to the refinery.

The Sungai Gerong refinery began operating in 1926 and became the largest and important oil refinery in South East Asia.

It was so important that the refinery was occupied by Japanese forces from 1942 to 1945 during World War II.

To meet the increasing demands for petroleum products in Africa and the Asia Pacific, Standard Oil Company of New Jersey and SOCONY (Standard Oil Company of New York) jointly created STANVAC (Standard Vacuum Oil Company) in 1933.

This was a synergistic partnership as Standard Oil Company of New Jersey had the oil production capacity and SONONY had the marketing facility.

The newly created Stanvac in the Netherlands East Indies consisted of three companies: Standard Vacuum Petroleum Maatschappij (SVPM), the Standard Vacuum Sales Company (SVSC), and the Standard Vacuum Tankvaart Maatschappij (SVTM).

Stanvac took over all the assets of SVPM in Indonesia and became a full-fledged oil company involved in oil exploration and production, refining, transportation, and distribution in more than 50 countries.

However, Stanvac continued to operate under its Dutch company name – SVPM – in the NEI.

Stanvac produced oil from many fields in South Sumatera. The notable ones were Talang Akar, Djirak, Benakat, Radja fields.   

In 1934, Stanvac expanded its operations to Central Sumatera.  Here it discovered and developed the well-known Lirik field and later the Binio field.

Things began to change after World War II and the declaration of independence of Indonesia.

It was after the declaration of independence by Indonesia in 1945, to distance itself from its Dutch connection, Stanvac began calling itself  Stanvac Indonesia as its company name to show its American origin.

In so doing, Stanvac was able to keep its assets and continue to operate in the newly independent Indonesia.

In 1960, as Indonesia wanted to have more control of the oil operation and business, it introduced the 1960 Oil Law which stated that all foreign oil companies must operate as a contractor for the Indonesian government.

On 24 September 1963, Stanvac signed the “Contract of Work” agreement with Indonesia’s Pertambangan Minjak Nasional (Permina).

The contract allowed Stanvac to continue to have full control of its oil exploration and production operations in Indonesia. Under this agreement, Stanvac must sell its refinery within ten to fifteen years.

However, Stanvac had to sell its Sungai Gerong refinery to Pertamina in 1969.

Stanvac Indonesia continued to operate its oil fields until finally, it left Indonesia in 1995 when it sold all its assets to Medco Energi for 88 million USD.

CALTEX

CALTEX was established in 1936 by Standard of California and Texaco to explore and produce oil in Indonesia and to expand its oil business in the Asia Pacific.

Earlier in 1924, The Standard of California had sent its team of geologists to Indonesia.

To operate in the Netherlands East Indies at that time, Caltex must obtain oil concessions from the government of NEI (Nederlands East India) who was the ruler of Indonesia at that time. To do so, Caltex established NPPM (Nederlandsche Pacific Petroleum Maatschappij), a Nederland registered company with its headquarters located in The Hague. Also, the company must be run by Dutch nationals.

In the same year, Caltex received its first oil concession in the Rimba area which is now known as the Rokan Block in Central Sumatera.

Soon after that Caltex began to find oil, but it was in 1941 that  Caltex discovered the huge Duri field. Due to the high pour point of its low gravity crude oil, it was necessary to use steam-flood to drive out the oil. Due to the success of the steam flood method, the Duri field became known as one of the largest steam-flood projects in the world. In spite of the huge challenges to produce the field, it has produced more than 2.64 billion barrels of oil so far.

Several years later Caltex went on to discover another giant oil field, The Minas field.

The story of the Minas field discovery is very interesting. In 1940, at the beginning of World War II, Caltex had started the drilling of its exploration well in the Minas area. However, before the drilling was completed, Caltex had to abandon the drilling as the Japanese army was coming to occupy the area and to take over the oil facilities.

The Japanese army engineers resumed the drilling of the well in 1943 and discovered oil when it drilled down to 2600 feet deep.

At the end of the war, Caltex regained control of its oil assets and continued to investigate the Minas field. After drilling several additional wells, Caltex confirmed the discovery of the huge Minas oil field.

Caltex went on to discover many smaller oil fields in its concession area.

By the late 1950s, Caltex became one of the largest oil producers in Indonesia.  At its peak in 1973, Caltex produced about 1 million BOPD from the Duri, the Minas, and about 80 smaller oil fields. Caltex holds the record of having the highest daily crude oil production rate in Indonesia.

Caltex completed the construction of a crude oil export terminal in Dumai in 1958.

Caltex signed a work contract agreement with Indonesia in 1961 giving it the right to continue to operate the Rokan block until 2001. Later on, Caltex managed to obtain a work contract extension to operate the block for another 20 years until 2021.

The two owners of CALTEX, Chevron, and Texaco merged in 2001 to become ChevronTexaco Corporation. Later on, in 2005, ChevronTexaco Corporation dropped the name Texaco and renamed the company as Chevron Corporation.

Following the name change of its parent company, Caltex in Indonesia which was initially incorporated as PT Caltex Pacific Indonesia changed its name to PT Chevron Pacific Indonesia.

By 2008, Chevron Pacific Indonesia had produced 11 billion barrels of crude oil from the extremely prolific Rokan block.

Although the Rokan block has been producing oil for more than 80 years, it still has 2 billion barrels of estimated producible reserves. It is considered as an important block in Indonesia’s ambition to increase the daily oil production in Indonesia to one million barrels by 2030.

Although the name Caltex disappeared in Indonesia after the name change, the Caltex petroleum brand is still alive in many countries in the Asia Pacific.

Epilogue

These three companies of the past were great companies to work for. Since most of their oilfields were located in the middle of a jungle, the companies provided good and well-rounded facilities – schools, clinics, cafeterias, places for worship, sports, and entertainment – to their employees and their families.

Many people and children of those who had worked for these companies have fond and colorful memories of the companies.

To me, the one that is the most interesting is BPM.

The joint venture of Royal Dutch Petroleum Company and Shell Trading and Transport Company that formed BPM – Bataafsche Petroleum Maatschappij – in Indonesia in 1907 sowed the seed that eventually grew into the current giant Shell Oil Company.

Also, BPM had a role in the rise of Pertamina when Pertamina took over all the assets of BPM in 1965.

WRITTEN BY

Jamin Djuang – Chief Learning Officer of LDI Training and author of The Story of Oil and Gas: How Oil and Gas Are Explored, Drilled and Produced


 

Geothermal Drilling by The Government of Indonesia

The Indonesia government will drill geothermal exploration wells in 20 geothermal work areas in Indonesia beginning in 2020 until 2024, according to Ida Nuryatin Finahari, Director of Geothermal in the Ministry of Energy and Mineral Resources.

The purpose of this initiative is to gather information on the geothermal potentials in each work area and to pass this information to potential investors.

The Indonesia government hopes this four year project will stimulate the interests of investors and accelerate the development of geothermal energy in Indonesia.

Here are the twenty geothermal work area where the government of Indonesia will drill exploration wells.

  • Lokop in Aceh
  • Sipoholon Ria Ria in North Sumatera
  • Sajau in North Kalimantan
  • Bora Pulu in Central Sulawesi
  • Marana in Central Sulawesi
  • Bittuang in South Sulawesi
  • Limbong in South Sulawesi
  • Jailolo in North Maluku
  • Banda Baru in Maluku
  • Nage in NTT (Nusa Tenggara Timur)
  • Maritaing in NTT
  • Sembalun in NTB (Nusa Tenggara Barat)
  • Gunung Batur – Kintamani in Bali
  • Guci in Central Java
  • Cisolok Cisukarame in West Java
  • Gunung Galunggung in West Java
  • Gunung Tampomas in West Java
  • Gunung Ciremai in West Java
  • Gunung Papandayan in West Java
  • Gunung Endut in Banten

If you want to understand how your geothermal reservoirs work and how to optimize them, Dr. Roland N. Horne will teach an online Geothermal Reservoir Engineering course on 6-9 October 2020.

The Famous Duri Oil Field

Duri to Dumai Road Construction in 1958

Eighty years ago, CALTEX discovered the huge Duri oil field in the Rokan block in Riau, Sumatera.

Oil was found at a shallow depth of 400 feet when CALTEX began drilling its exploration wells in 1941. However, the exploration drilling was interrupted due to the onset of the World War 2. After the war ended, CALTEX managed to obtain the approval from the newly formed government of Indonesia to operate in the Rokan block under a work contract scheme. Eventually, oil production from the Duri field began in February 1954.

The giant Duri field – 10 km wide and 18 km long – is one of the many oil fields discovered in the Rokan block. Minas is another giant oil field discovered in this block.

Oil production peaked at 65,000 BOPD in the 1960s.

Due to the high viscosity of the low gravity oil, to enhance the production, the steam injection was introduced in 1985.

The Duri steam flood project was so successful that it became one of the largest and the best steam floods in the world.

Thanks to the successful steam injection, Duri oil production increased significantly to 185,000 BOPD.

After 30 years of the steam flood, the production had declined to about 50,000 BOPD by 2017.

With more than 2.6 billion barrels of cumulative oil produced, the giant Duri field is still producing today.

Chevron will hand over the operatorship of the Duri field and the Rokan block to Pertamina in August 2021.

Terms Related To Decarbonization

 

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To reduce the impacts of climate change due to greenhouse gases, many countries and businesses are moving towards carbon-neutrality.

One of these moves is decarbonization and the other is the use of clean energy such as hydrogen and renewable energy.

Microsoft recently announced its commitment to become carbon negative by 2030. Microsoft also said that it will remove more carbon from the environment than it has ever emitted in the past by 2050

Here are some of the technical terms related to decarbonization and clean energy.

Carbon Footprint

Carbon footprint is the amount of carbon dioxide emissions created by a person or industry.

Carbon Tax

Carbon tax is tax paid by businesses and industries that produce carbon dioxide through their operations.

Carbon Neutrality

Carbon neutrality is a term used to describe the action of organizations, businesses, and individuals taking action to remove as much carbon dioxide from the atmosphere as each put into it.

The overall goal of carbon neutrality is to achieve a zero-carbon footprint. For example, a business may plant trees in different places around the world to offset the electricity the business uses. This practice is often called carbon offset or offsetting.

Carbon Capture and Storage (CCS)

CCS is the process of capturing waste carbon dioxide usually from large sources such as a factory or power plant, transporting it to a storage site, and depositing it where it will not enter the atmosphere, usually a subsurface rock formation.

Currently, there are less than 20 coal plants that use CCS technology to capture the produced carbon dioxide.

Carbon-Neutral Fuels

Carbon-neutral fuel is a fuel that has no net greenhouse gas emissions or carbon footprint. An example is a synthetic fuel produced by hydrogenating the carbon dioxide captured directly from the air.

Carbon Negative Fuels

Carbon negative fuels are fuels that take more carbon out of the environment than it generates.

DAC

Direct air capture is the process of capturing carbon dioxide directly from the air to produce a concentrated stream of CO2 for sequestration or utilization. In terms of utilization, as an example, the CO2 is being used to drive out reservoir oil in many CO2 miscible EOR projects around the world. The captured CO2 can also be used to produce carbon-neutral fuels by hydrogenating it with hydrogen.

Fuel Cells

Fuel cells are devices that convert the chemical energy of a fuel directly into electricity by electrochemical reactions. For example, hydrogen cars use fuel cells to convert the energy stored in the hydrogen into electrical energy for powering the car.

GHG

Greenhouse gases are gases that cause the greenhouse effect on our planet. The most common types of greenhouse gases are CO2, carbon monoxide (CO), methane (CH4), water vapor (H2O), Nitrous oxide (N2O), and ozone (O3).

Hydrogen Economy

The hydrogen economy is a situation where hydrogen is used as the major carrier of energy.  

Renewable Energy

Renewable energy is any naturally occurring, theoretically inexhaustible source of energy, as biomass, solar, wind, tidal, wave, and hydroelectric power, that is not derived from fossil or nuclear fuel.

RNG

Renewable Natural Gas is produced by capturing methane emitted from the breakdown of organic wastes in landfills, wastewater and farms, and processing it into natural gas.

Net Zero Carbon Emission

Net zero carbon emission is a balance achieved when the amount of carbon that we emit is offset by the amount of carbon we remove from the atmosphere.

 

This glossary is curated by Jamin Djuang, a published author of “The Story of Oil and Gas: How Oil and Gas Are Explored, Drilled and Produced” written for readers who have not seen an oil field.

 

The West Seno Oil Field

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From top left clockwise: The tension leg platform of West Seno (TLP-A), a drilling support vessel, and the floating production unit (FPU).

Discovered by Unocal in 1998, the West Seno field, lying in water depths of about 3200 feet, is the first deepwater oil field in Indonesia.

Located in the Strait of Makassar, the West Seno field is about 50 km away from the giant Attaka field and 60 km from the Santan terminal in East Kalimantan.

The oil and gas are produced through a tension leg platform (TLP) which is also the first of its kind in Indonesia.

The floating topside of the tension leg platform is attached to the seafloor by four 3200 feet long tendons having a diameter of 26 inches and a wall thickness of 1.036 inches.

Currently, all the subsea wells are produced from platform TLP-A which can accommodate 28 wells. Unocal originally had planned to build two tension leg platforms.

Oil production from the West Seno wells began in 2003 and currently, they are producing about 1200 BOPD. The fluids from the subsea wells are initially separated into oil and gas on the FPU (Floating Production Unit).

The separated oil and gas are then transmitted via two 12-inch diameter and 60 km long pipelines to the onshore facilities at Santan for final handling and storage.

One of the oil production challenges of West Seno is handling the difficult-to-break emulsions. The emulsions are hard to break due to the presence of certain chemicals in the fluid, the decreasing fluid temperature as it rises to the surface, and the motion of the floating platform.

The West Seno offshore production facilities also handle the production from the nearby Bangka field. Bangka field produces about 1000 barrels of condensate daily and 40 MMSCF of gas per day.

The development of the West Seno field was made possible by having a favorable PSC profit splits of 35 percent instead of the regular 15 percent for shelf developments.

The field is currently operated by Chevron.